profit margin

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Profit margin

Indicator of profitability. The ratio of earnings available to stockholders to net sales. Determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage. Also known as net profit margin.

Profit Margin

A measure of how well a company controls its costs. It is calculated by dividing a company's profit by its revenues and expressing the result as a percentage. The higher the profit margin is, the better the company is thought to control costs. Investors use the profit margin to compare companies in the same industry and well as between industries to determine which are the most profitable.

profit margin

1. The relationship of gross profits to net sales in a business. Net sales are determined by subtracting returns and allowances from gross sales, whereupon the cost of goods sold is then subtracted from net sales to obtain gross profit. Gross profit is divided by net sales to obtain the profit margin—an excellent indicator of a firm's operating efficiency, its pricing policies, and its ability to remain competitive. See also gross profit margin.
2. Net profit margin of a business, which is calculated by deducting operating expenses and cost of goods sold and dividing the result by net sales. This term is less often used to indicate net profit margin.

Profit margin.

A company's profit margin is derived by dividing its net earnings, after taxes, by its gross earnings minus certain expenses. Profit margin is a way of measuring how well a company is doing, regardless of size.

For example, a $50 million company with net earnings of $10 million and a $5 billion company with net earnings of $1 billion both have profit margins of 20%.

Profit margins can vary greatly from one industry to another, so it can be difficult to make valid comparisons among companies unless they are in the same sector of the economy.

profit margin

the difference between the SELLING PRICE of a product and its PRODUCTION COST and SELLING COST. The size of the profit margin will depend upon the percentage profit mark-up which a firm adds to costs in determining its selling price. The size of the profit margin is measured by the PROFIT-MARGINS RATIO.

profit margin

the difference between the SELLING PRICE of a product and its PRODUCTION COST and SELLING COST. The size of the profit margin will depend upon the percentage profit mark-up that a firm adds to costs in determining its selling price, which in turn may be varied in response to changes in demand conditions and competition. See FULL-COST PRICING.

profit margin

The difference between the cost of a unit (house,subdivision parcel,condominium) including a pro rata share of all overhead and other such expenses, as compared to the sales price for that unit.

References in periodicals archive ?
CEO of RHB Indochina Securities Iv Ranarith said the two factors affecting net profit margins include changes in revenue and a company's expenditure.
The rating agency added that the following factors could lead to a downgrade: (i) debt-to-EBITDA ratio above 3.5x, (ii) (EBITDA - capex) coverage of interest below 4x, or (iii) net profit margin below 6%.
Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries--adjustments commonly made to private-company financials in order to provide a more accurate picture of the companies' operational performance.
Achieving net profits is among the foremost goals for any incorporated business, and a comfortable net profit margin can indicate that this goal is being met.
The net profit margin is the percentage of a revenue dollar that a business keeps after all the bills are paid.
The study showed that the least global group of retailers (those with the lowest IMG scores) had an average net profit margin of 3.48%.
On the margins front, however, corporate India has witnessed some improvement with operating and net profit margins increasing 2.1 percentage points and 1.3 percentage points, respectively, over the past four quarters.
However, industry net profit margins are still unexciting to stand at 1.1% of revenues in 2012, 1.8% in 2013, and 2.6% in 2014.
The ratings mirror the highly-experienced promoters of the company, its diverse product portfolio, healthy growth in revenues and improving net profit margins in the last two years.
Raico initially managed 15 mortgage loan officers, but increased that figure to more than 30 by mid-2000, while increasing net profit margins by more than 120% and decreasing expenses by 35%.
saw net profit margins weaken during fiscal 2001's second quarter and first half.
The more worrying trend is the linear decline of net profit margins over the past four years.